Investing in real estate can be considered a laborious and comprehensive process, especially for first-time investors. Acquiring rental property requires extensive knowledge on the part of the investor to ensure that the investment will be a long-term success. When searching for an income property, investors are often confronted with endless considerations that play important roles in the return of the property.
There are ten top things that influence the successful of a rental property. These aspects are considered some of the most important features because they provide the main driving forces behind successful rental properties. By understanding these characteristics, you will obtain fundamental knowledge about the nature of rental properties and make crucial decisions about your future property.
Top 10 most important factors in rental property
The location of a property can make or break the value of a rental property, especially because there are several factors to consider. First, the location of the property will not change, unless the building structure is physically damaged in some way. Tenants frequently think the location of the property a priority. This is because the external aspects may lend greater appeal if the property is lacking in some respects.
The proximity of the property to schools, and with regard to crime rates, plays a large influence for tenants. If the property contains excellent qualities, but the school does not have a good reputation, then this may harm the quality of the property. Furthermore, the rate of crime can also dampen the value of the rental property if there have been recent crimes.
The type of area where the property is located will dictate the kinds of tenants who are interested. It will then affect the frequency of vacancies. If the community contains many tenants who have children, then young couples may be future renters. Neighbourhoods also closer to small towns or cities can attract tenants interested in different opportunities. Having close access to public facilities such as parks, running/biking trails, and even libraries can make the property more appealing for tenants.
The number of residents who are attracted to the property will also increase with the number of appliances in the rental. Specifically, stainless steel appliances are rapidly becoming the perfect household touch for properties. Some properties already have basic appliances. The addition of stainless steel ones packs more value for the property, since they are easy to clean and maintain. Tenants are likely to pay more for the rental when the property has these appliances, especially because tenants may not have to pay future costs for appliances.
The proximity of the property to transportation is essential because it can provide tenants with some financial flexibility. If the property is close to the Metro, then it is an excellent resource for the property and may even replace the tenant’s form of transportation. Transportation of this kind has become more widespread in some areas, especially on the East Coast.
Other forms of transportation, such as buses, are useful for tenants. Some neighborhoods have local bus stops for residents, which can also help tenants cut future gas costs.
The income of the rental is the important part of the property. Therefore, having some knowledge about the average rent in the vicinity can provide a much-needed valuation of the property. A good quality rental should be reasonably priced, but it should not be extremely overpriced. However, if the rental cost does not cover expenses, then the property is not ideal for a long-term investment. Expenses will include taxes, mortgage payments, insurance costs and more. Instead, the costs should cover these expenses and be similar to other rental expenses in the area.
Properties in areas where the job market is expanding offer exciting opportunities for tenants seeking employment. Companies are always growing, and the larger the job market, the more appealing the location and property to the tenant. Even if the tenant is already employed, the employment opportunities that are available in the area will provide residents with a sense of assurance for the future, preventing job transfers. Tenants will be more likely to stay for longer and pay rent consistently with the proximity of employment.
Private parking can be extremely beneficial, in particular for those who drive to work on a routine basis. Many people drive cars, and they will pay more money to have the guarantee of a spot for a certain amount of time. In cities, people will pay a minimum of a few hundred dollars for monthly parking permits. The convenience aspect is important, because people often pay a premium for convenience. This factor is extremely important when thinking about buying a condo as an investment property.
When embarking on the search for a rental property that will produce stable returns, the weather is another critical aspect. If you own or will own a rental property, you will probably insure the property against damage caused by weather. You may consider this an unnecessary expense, but the history of damaged properties from severe weather can affect cost of insurance. Not insuring the property could impose devastating expenses for the future. Beware if the property is in an area which receives consistently severe weather, such as heavy windows or flooding. It will also yield negative returns on the investment when the infrastructure of the property has to be replaced with newer structures to prevent further damage.
The quality and location of the property are just half of the package. The facilities in the vicinity also supply the appeal of the property for tenants. This is true especially if the property is in an isolated area. Today, tenants envision properties with access to theaters, parks, malls, and art galleries, because these amenities have become standard features in towns and cities.
The diverse range of the facilities is also important because they unlock the advantage of having choices for tenants who may enjoy various activities.
An ideal rental property should be able to have good and consistent showings for tenants. Even if you are prepared financially to invest in a lower quality property and upgrade the infrastructure, there are some disadvantages. Investing in properties that require heavy-duty repairs could cut into your savings and end up as long-term projects. Not all properties are perfect, but properties that require minor preparation will be easier on your budget.
Investing in rental properties can be challenging, with the hundreds of options available. Considering these features creates a practical and sensible framework for your final decision, because the idea is to build a solid and successful future investment. And once your portfolio grows, you should look into hiring a great property management company as well.